FM Chapter 2 and 3 Exam 1

Jack Corp. has a profit margin of 6.3 percent, total asset turnover of 2.2, and ROE of 18.44 percent. What is this firm's debt-equity ratio?

.33

If Roten Rooters, Inc., has an equity multiplier of 1.50, total asset turnover of 1.70, and a profit margin of 6 percent, what is its ROE?

15.30%

Pompeii, Inc., has sales of $48,500, costs of $22,400, depreciation expense of $2,100, and interest expense of $1,850. If the tax rate is 25 percent, what is the operating cash flow, or OCF?

20,563

Income Statement

A financial statement showing the revenue and expenses for a fiscal period.

balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Wims, Inc., has current assets of $5,000, net fixed assets of $23,000, current liabilities of $3,500, and long-term debt of $7,900. a. What is the value of the shareholders' equity account for this firm? (Do not round intermediate calculations.) b. How much is net working capital? (Do not round intermediate calculations.)

A. 16,600 B. 1,500

Griffin's Goat Farm, Inc., has sales of $674,000, costs of $336,000, depreciation expense of $80,000, interest expense of $50,000, a tax rate of 22 percent, and paid out $43,000 in cash dividends. What is the addition to retained earnings?

Addition to RE 119,240

Griffin's Goat Farm, Inc., has sales of $666,000, costs of $328,000, depreciation expense of $72,000, interest expense of $46,000, and a tax rate of 24 percent. What is the net income for this firm

Net income 167,200

profitability ratios

profit margin, return on assets, return on equity

common ratios

s-t solvency: liquidity asset management l-t solvency: financial leverage profitability market-based measures

cash flow

the difference between cash coming in and cash going out of a business

Common-sized balance sheet

a balance sheet in which a firm's assets and sources of debt and equity are expressed as a percentage of its total assets

Queen, Inc., has a total debt ratio of .32. a. What is its debt-equity ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is its equity multiplier?

a. .47 b. 1.47

SDJ, Inc., has net working capital of $2,810, current liabilities of $4,000, and inventory of $3,520. a. What is the current ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is the quick ratio

a. 1.7 b .82

Twist Corp. has a current accounts receivable balance of $345,800. Credit sales for the year just ended were $4,478,110. a. What is the company's receivables turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is the company's days' sales in receivables? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) c. How long did it take on average for credit customers to pay off their accounts during the past year?

a. 12.95 b. 28.19 c. 28.19

DTO, Inc., has sales of $23 million, total assets of $20.5 million, and total debt of $7.9 million. Assume the profit margin is 12 percent. a. What is the company's net income? (Do not round intermediate calculations. Enter your answer in dollars not in millions, e.g., 1,234,567.) b. What is the company's ROA? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the company's ROE?

a. 2,760,000 b. 23.46 c. 21.90

During 2018, Raines Umbrella Corp. had sales of $730,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $451,000, $97,500, and $143,000, respectively. In addition, the company had an interest expense of $71,600 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume interest expense is fully tax deductible.) a. What is the company's net income/loss for 2018? (Do not round intermediate calculations. Enter your answer as a positive value.) b. What is the company's operating cash flow?

a. 33,100 b. 181,500

Griffins Goat Farm, Inc., has sales of $672,000, costs of $334,000, depreciation expense of $78,000, interest expense of $49,000, a tax rate of 25 percent, and paid out $44,000 in cash dividends. The firm has 28,200 shares of common stock outstanding. a. What are the earnings per share figure? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What are the dividends per share figure? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

a. 5.61 b. 1.56

Square Hammer Corp. shows the following information on its 2018 income statement: Sales = $226,000; Costs = $122,000; Other expenses = $7,900; Depreciation expense = $17,900; Interest expense = $14,700; Taxes = $22,225; Dividends = $12,000. In addition, you're told that the firm issued $6,200 in new equity during 2018 and redeemed $4,700 in outstanding long-term debt. a. What is the 2018 operating cash flow? (Do not round intermediate calculations.) b. What is the 2018 cash flow to creditors? (Do not round intermediate calculations.) c. What is the 2018 cash flow to stockholders? (Do not round intermediate calculations.) d. If net fixed assets increased by $30,000 during the year, what was the addition to NWC? (Do not round intermediate calculations.)

a. 73,875 b.19,400 c.5,800 d. 775

The King Corporation has ending inventory of $483,565, and cost of goods sold for the year just ended was $4,448,798. a. What is the inventory turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is the days' sales in inventory? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) c. How long on average did a unit of inventory sit on the shelf before it was sold? (Use 365 days a year

a. 9.2 b. 39.67 c. 39.67

asset management

a/r turnover inven. turnover FA turnover TA turnover

common sized income statements

assist in the comparison of companies of different sizes

operating cash flow

cash generated from a firm's normal business activities Add back dep and interest

s-t solvency: liquid

cuurent ratio, quick ratio, cash ratio

l-t solvency

debit ratios debt to equity time interest earned cash coverage equity multipler l-t debit ratio

cash flow to stockholders

dividends, retirement of equity (+) new equity raised (-)

cash flow to creditors

interest and reductions in borrowing (+) increases in borrowing (-)

net capital spending

is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense. CA-CL

cash flow from assets

operating CF (+ or -) capital spending (-) changes in net working capital (+ or -)